1. The primary objective of financial reporting is             .
A. to present information in an ethical manner
B. to provide information to the federal government
C. to provide information useful for investment and lending decisions
D. to provide information useful to managers in making daily decisions
2. On July 31, $3600 is paid for a one-year insurance policy. On December 31, the adjusting entry for prepaid insurance would include         .
A. a debit to Insurance Expense, $3600
for the saleB. a credit to Prepaid Insurance, $3600
C. a debit to Insurance Expense, $1500
D. a credit to Prepaid Insurance, $2100
3. All of the following are controls over cash received in a store except          .
A. the clerk should have access to the cash register tape to make corrections when necessary
B. the customer should be able to see the amounts entered into the register
C. it should be a requirement that a receipt be given to the customer
D. the cash drawer should open only when the sale clerk enters an amount on the keys
4. Which of the following statements is true?
A. Revenues are assets because they represent economic benefits
B. Assets are economic resources that are expected to benefit future periods
C. The accounting equation can be stated as Assets + Liabilities = Owner’s Equity
D. Liabilities are economic obligations to insiders
5. Which of these statements is false?
A. Increases in assets and increases in revenue are recorded with a debit
B. Increases in liabilities and increases in owner’s equity are recorded with a credit
C. Increases in both assets and withdrawals are recorded with a debit
D. Decreases in liabilities and increases in expenses are recorded with a debit
6. An adjusting entry could contain all of the following except             .
A. a debit to Unearned Revenue
B. a credit to Cash
C. a debit to Interest Receivable
D. a credit to Salary Payable
7. The entry required to close withdrawals at the end of the period should include a                 .
A. debit to income Summary        B. credit to Capital
C. debit to Capital                     D. debit to Withdrawals
8. The principle or concept that holds that an entity will remain in operation for foreseeable future is the           .
A. going-concern concept             B. stable-monetary-unit concept
C. reliability principle                D. cost principle
9. All of the following are controls over cash received in a store except
                .
A. The clerk should have access to the cash register tape to make corrections when necessary
B. The customer should be able to see the amounts entered into the register
C. It should be a requirement that a receipt be given to the customer
D. The cash drawer should open only when the sale clerk enters an amount on the keys
10. The entry to record the sale of $100 of merchandise with terms of 2/10 n/30 will include a           .
A. debit to Sales for $98                B. debit to Cash $100
C. debit to Account Receivable of $100 D. debit to Sales Discount for $2
11. The weighted average for the year inventory cost flow method is applicable to which of the following inventory systems?
        Periodic        Perpetual
A.        Yes              Yes
B.        Yes                  No
C.        No                Yes
D.        No                No
12. Accelerated depreciation methods are used primarily in           ?
A. Income tax returns
B. The financial statements of small businesses
C. The financial statements of publicly owned corporations
D. Companies with computer-based accounting systems
13.Cox Company began the month of July with a balance in Accounts Receivable of $51600. During July, Cox reported cash sales of $50000, credit sales on account of $228000, collections from customers on account, $201400, and write-offs of $750. Uncolle
ctible Account expense for July was estimated to be 1% of credit sales. The balance in Accounts Receivable on July 31 is       .
A. $77450 B. $75170 C. $75920 D. 80550
14. A capital lease is recorded in the accounting records of the lessee by an entry             ?
A. Debiting Rent Expense and crediting Cash each time a lease payment is made       
B. Debiting Cash and crediting Rental Revenue each time a lease payment is received
C. Debiting an asset account and crediting a liability account for the present value of the future lease payments    

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